Question 1

Suppose American winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions. This would be an example of

Accepted Answer

A)  moral hazard.
B)  the principal-agent problem.
C)  logrolling.
D)  rent-seeking behavior.E) B) and C)
F) A) and B)

Question 2

It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.

Accepted Answer

A) True 
 B)False

Question 3

The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.

Accepted Answer

A) True 
 B)False

Question 4

The pursuit through government of special benefits at society's expense is called "rent seeking."

Accepted Answer

A) True 
 B)False

Question 5

Answer the question based on the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars.  Suppose a five-person city council must decide via majority voting which of these stadiums to build. Also suppose that each of the stadium sizes has the support of one council member. According to the median-voter model, the council will ultimately vote in favor of stadium

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) B) and C)
F) C) and D)

Question 6

The so-called pork-barrel politics refers to congressional members

Accepted Answer

A)  trading votes with one another.
B)  receiving perks and freebies from businesses trying to sway their votes.
C)  paying little attention to the vocal special-interest groups.
D)  inserting provisions for local narrow projects into comprehensive legislation.E) A) and D)
F) A) and C)

Question 7

"Vote for my special local project and I will vote for yours." This political technique

Accepted Answer

A)  illustrates the paradox of voting.
B)  is called "logrolling."
C)  illustrates the median voter model.
D)  undermines the benefits-received principle.E) All of the above
F) A) and D)

Question 8

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars.  Based on cost-benefit analysis, the city should

Accepted Answer

A)  not build any of these stadiums.
B)  build stadium E.
C)  build stadium C.
D)  build stadium D.E) All of the above
F) None of the above

Question 9

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the

Accepted Answer

A)  paradox of voting.
B)  concept of logrolling.
C)  median-voter model.
D)  Coase theorem.E) B) and C)
F) None of the above

Question 10

If one person's consumption of a good does not preclude another's consumption, the good is said to be

Accepted Answer

A)  nonrival in consumption.
B)  rival in consumption.
C)  nonexcludable.
D)  excludable.E) None of the above
F) C) and D)

Question 11

Suppose the U.S. House of Representatives is debating a bill to fund construction and maintenance for the nation's highway system. Representative Sandy Shady adds a provision to the bill that would fund a new public art museum in her district. The authorization of expenditure for the museum would be an example of

Accepted Answer

A)  an earmark.
B)  an unfunded liability.
C)  a collective action problem.
D)  a principal-agent problem.E) A) and B)
F) B) and D)

Question 12

Some economists contend that government agencies are generally less efficient than private businesses due to the following reasons, except

Accepted Answer

A)  government bureaucracies do not face the profit motive, which is a major incentive that guides private firms.
B)  government bureaucrats tend to deal with failing programs by putting more resources into the programs, rather than eliminating the program.
C)  incompetent workers gravitate toward government, while motivated workers gravitate toward the private sector.
D)  bureaucrats, along with the special-interest groups they serve, often gain enough political clout to keep their agencies going regardless of performance.E) C) and D)
F) A) and B)

Question 13

Private firms can hardly produce a public good profitably because of

Accepted Answer

A)  liability rules and lawsuits.
B)  the free-rider problem.
C)  shortages and surpluses.
D)  moral hazard and adverse selection.E) B) and D)
F) A) and C)

Question 14

Answer this question based on the following information for a public good. Pₐ and Pᵦ represent the prices that citizens (a) and (b) , the only two people in this nation, are willing to pay for additional units of a quantity (Qc ) of the public good. Qₛrepresents the quantity of the public good supplied by government at each of the collective prices. c ) of the public good. Qₛrepresents the quantity of the public good supplied by government at each of the collective prices.   If only 1 unit of this public good is produced, then the marginal benefit is A) $3, and the marginal cost is $9. B) $4, and the marginal cost is $7. C) $6, and the marginal cost is $3. D) $9, and the marginal cost is $3. " class="answers-bank-image d-inline" rel="preload" > If only 1 unit of this public good is produced, then the marginal benefit is

Accepted Answer

A)  $3, and the marginal cost is $9.
B)  $4, and the marginal cost is $7.
C)  $6, and the marginal cost is $3.
D)  $9, and the marginal cost is $3.E) C) and D)
F) B) and D)

Question 15

Explain the paradox of voting.

Accepted Answer

The paradox of voting is a situation in ...

Question 16

The unlawful misdirection of governmental resources for personal gain is known as

Accepted Answer

A)  political corruption.
B)  logrolling.
C)  adverse selection.
D)  the special-interest effect.E) A) and B)
F) B) and C)

Question 17

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting is

Accepted Answer

A)  the fallacy of limited decisions.
B)  the paradox of voting.
C)  the median-voter model.
D)  political logrolling.E) A) and D)
F) A) and C)

Question 18

According to a study of hospitals, power plants, and water utilities, health and safety violations are more prevalent in public companies because

Accepted Answer

A)  private companies have greater technical expertise than public companies.
B)  public companies are less likely to be fined for violating health and safety laws than private companies.
C)  laws for public companies are more stringent, making it more difficult for public companies to comply.
D)  public companies are more closely monitored, making it easier to detect violations.E) B) and D)
F) None of the above

Question 19

The two main characteristics of a public good are

Accepted Answer

A)  production at constant marginal cost and rising demand.
B)  nonexcludability and production at rising marginal cost.
C)  nonrivalry and nonexcludability.
D)  nonrivalry and large negative externalities.E) None of the above
F) A) and D)

Question 20

One implication of the median-voter model is that at any point in time, most voters will

Accepted Answer

A)  be happy with the amount of government involvement in the economy.
B)  find government involvement in the economy to be too much.
C)  find government involvement in the economy to be too little.
D)  be unhappy with the amount of government involvement in the economy.E) A) and C)
F) All of the above

Exam 5: Public Goods, Public Choice, and Government Failure

"Vote for my special local project and I will vote for yours." This political technique

Correct Answer
verified

The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.

Correct Answer
verified

The unlawful misdirection of governmental resources for personal gain is known as

Correct Answer
verified

The so-called pork-barrel politics refers to congressional members

Correct Answer
verified

Explain the paradox of voting.

Correct Answer
verified
The paradox of voting is a situation in ...
View Answer

According to a study of hospitals, power plants, and water utilities, health and safety violations are more prevalent in public companies because

Correct Answer
verified

If one person's consumption of a good does not preclude another's consumption, the good is said to be

Correct Answer
verified

The two main characteristics of a public good are

Correct Answer
verified

The pursuit through government of special benefits at society's expense is called "rent seeking."

Correct Answer
verified

Private firms can hardly produce a public good profitably because of

Correct Answer
verified

One implication of the median-voter model is that at any point in time, most voters will

Correct Answer
verified

Some economists contend that government agencies are generally less efficient than private businesses due to the following reasons, except

Correct Answer
verified

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars. Based on cost-benefit analysis, the city should

Correct Answer
verified

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting is

Correct Answer
verified

It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.

Correct Answer
verified

Correct Answer
verified

Suppose American winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions. This would be an example of

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the

Correct Answer
verified

Exam 5: Public Goods, Public Choice, and Government Failure

"Vote for my special local project and I will vote for yours." This political technique

Correct AnswerverifiedShow Answer

The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.

Correct AnswerverifiedShow Answer

The unlawful misdirection of governmental resources for personal gain is known as

Correct AnswerverifiedShow Answer

The so-called pork-barrel politics refers to congressional members

Correct AnswerverifiedShow Answer

Explain the paradox of voting.

Correct AnswerverifiedThe paradox of voting is a situation in ...View AnswerShow Answer

According to a study of hospitals, power plants, and water utilities, health and safety violations are more prevalent in public companies because

Correct AnswerverifiedShow Answer

If one person's consumption of a good does not preclude another's consumption, the good is said to be

Correct AnswerverifiedShow Answer

The two main characteristics of a public good are

Correct AnswerverifiedShow Answer

The pursuit through government of special benefits at society's expense is called "rent seeking."

Correct AnswerverifiedShow Answer

Private firms can hardly produce a public good profitably because of

Correct AnswerverifiedShow Answer

One implication of the median-voter model is that at any point in time, most voters will

Correct AnswerverifiedShow Answer

Some economists contend that government agencies are generally less efficient than private businesses due to the following reasons, except

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars. Based on cost-benefit analysis, the city should

Correct AnswerverifiedShow Answer

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting is

Correct AnswerverifiedShow Answer

It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose American winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions. This would be an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the

Correct AnswerverifiedShow Answer

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The paradox of voting is a situation in ...
View Answer

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